Written by Tom Jeffery, Operations & Remediation Director - Square 4
The UK financial services market is a complex and ever-changing industry, with a wide range of products and services available to consumers. One of the biggest issues facing consumers today is the problem of unaffordable lending. This occurs when a lender provides a loan or credit to an individual who is unable to afford the repayments. The cause is often a combination of two key factors:
Customer misstatement: the customer under or overstating their income and outgoings (knowingly or otherwise!)
Verification and validation: the lender not performing sufficient verification checks to validate the customer's claims (often the result of misinterpreting the FCA’s proportionality rules).
For the past few years, I have had a front-row view of these issues and as I transition from ‘client’ to ‘servicer’, it’s clear this is an ever-increasing issue facing the Consumer Credit industry. Unaffordable lending is well understood and documented issue for most, and the Financial Ombudsman has long since outlined their principle position here, and I don’t plan to repeat too much of that again, but please do have a read if you haven’t already.
Complaints Target Operating Model (TOM)
What’s often under-looked and not discussed, is the Target Operating Model to deal with mass claims and specifically the destabilising impact this issue can have on culture and the very people assigned to manage this task. It may sound convenient for me to say, but I’ve always believed mass claims, particularly about unaffordable lending best handled by a standalone impartial team – whether that be employed or contracted is largely driven by business appetite.
I’ve seen first-hand the toxic impact a mass claim event can have on a Complaints Team; this complaint nature is largely transactional in nature – meaning – it’s less about service recovery, brand and trust pilot scores. Despite this, I see all too often examples of Complaints Teams and Leadership blending mass claims with service-related complaint resource. This is an ‘oil and water’ strategy. Often the cynicism that persists in a mass claims environment can trickle over to other areas of the Complaints Team – not good for customers, morale, or the culture of the team. Pertinent to consider as we face a Consumer Duty regime.
Complaint Handlers need to believe they are helping and assisting customers – this is fundamental to service recovery and brand advocacy. Do not underestimate the importance of structure and segregation of duties should you be handling a mass claims event – productivity, quality and customer outcomes will thank you for it!
Equally important, is how you mobilise a workforce to handle a mass claim event – often the greatest efficiency is to break the complaint up into its component parts:
Data gather (including complaint concern breakdown),
Final response draft and,
Have these items repeated i.e., a team to constantly perform one or two of the component parts and in doing so get faster and more accurate as they go – often speed and quality come from repeatedly performing the same task – it drives consistency in the outcome and if done well can inform system automation as part of your transformation agenda.
I’ve worked with several clients with regard to their TOMs and should you find this of interest, please do get in touch.
About Square 4
Square 4 was founded with the vision to support people and businesses to grow and thrive.
Across the team, we have extensive experience incorporating the ‘big four’ professional service firms, industry regulators, leadership roles within regulated firms and other outsourced learning, resourcing and consultancy providers. We combine this expertise with best-in-class technology across an evolving spectrum of conduct, financial crime and operational risk.